Republican voters are eyeing their presidential candidates up and down, wondering just what core conservative principles lurk beneath the expensive suits. They received their first inkling this week when the front-runners--namely Mitt Romney and Rudy Giuliani--started showing some leg on an issue that has the potential to galvanize the race: pro-growth economic policies.
Tax cuts and pro-growth talk are staples of modern Republican primaries, but 2008 could elevate those issues to new heights. The base is in the dumps, disenchanted with a party that has lost sight of its economic moorings. This at a time when entitlements are ballooning, and the tax code threatening to devour millions more Americans. Add it up, and there's a wide-open opportunity for a bold GOP candidate to capture imaginations with a sweeping economic plan, rooted in tax reform, but extending to an overhaul of everything from entitlements to trade.
Have no doubt that at least a few contenders are also banking on a fireball economic plan to deflect attention from their more problematic social-issue records. The big question is whether any one can convince GOP primary voters that they are the real, Reagan deal. To answer that, it's worth taking a look at the top tier's advisers, records and latest moves.
While short on details, he laid out a marker for the field, calling for lower marginal tax rates, a more competitive corporate tax and the end of the death tax. This isn't necessarily a surprise, given Mr. Romney's economic team is largely made up of the Bush tax-cut brain trust, including former Council of Economic Advisers chief Glenn Hubbard, his successor, Greg Mankiw, and Brian Reardon. Mr. Romney also scored a coup with economist John Cogan, who knows budgets inside-out, and is a tax-cutter to boot.
What attracted many of these economists to the Romney team was the former governor's success, in a liberal state, of beating back big-tax proposals and instead choosing to erase deficits by hacking away at spending. Mr. Romney's challenge will now be in convincing economic conservatives that his tax plan, and other pro-growth talk, is more than just election rhetoric. In particular, he'll need to do some explaining about his Massachusetts health-care plan, which Mr. Romney touted as a market-based reform, but was more about new government regulation.
The team least happy with this early Romney tax marker is surely John McCain's. The super-senator has been unable to get much traction with this second bid for the White House, thanks in part to conservatives' distrust of his economic credentials. The maverick was born out of the old austerity wing of the GOP, tough on spending, big on balanced budgets, grave about the need for entitlement reform. These were the traits Mr. McCain stressed in his last run, and by the look of his new team, little will change this time around.
His advisors, former CBO head Douglas Holtz-Eakin, Phil Gramm and former Fed economist Kevin Hassett, are in line with Mr. McCain's own balanced-budget, anti-spending views. There are also smart, free-market gurus in residence, including former FTC head Tim Muris, and Bob Zoellick, who will underline Mr. McCain's tough stance on free trade (at least when he isn't advocating steel tariffs).
The Arizonan, under pressure from the right, has now called to extend the Bush tax cuts, although rumblings within his camp suggest that any tax proposals beyond that will probably be limited to tinkering within the tax code--a "revenue-neutral" reform. It's something, but it isn't going to score points with those who are already wary of his supply-side credentials. It also misses the point that--no matter how tough an anti-spending line Mr. McCain takes--it's going to take a growing economy to fund even reformed Social Security and Medicare programs. And growth only comes with smart tax policy.
The dark horse remains Mr. Giuliani. The former mayor only recently brought on a chief economic advisor, Michael Boskin, who chaired the Council of Economic Advisers under Bush I, and sports his own pro-growth street cred. But Mr. Giuliani may have got his biggest boost when Mr. Flat Tax himself, Steve Forbes, stepped up behind the New Yorker. (See the op-ed nearby.) Mr. Giuliani accepted that endorsement with his own flirtatious language about the merits of a flax tax, leaving the door open for something creative.
Like Mr. Romney, the former mayor will need something to convince conservatives he's pro-growth genuine. The Yankees fan has been reminding audiences that he cut taxes 23 times as mayor of New York, and Mr. Boskin has explained that this led to record Big Apple surpluses. Less mentioned is just how ably Mr. Giuliani tore through some of those surpluses, in particular the later years--or his calls for taxpayer-funded baseball stadiums.
Like everything in this sped-up race, the economic talk is coming early (President Bush didn't unveil his own tax plan until December 1999). But if nothing else, it means Republican voters might get to watch their presidential aspirants engage in good, long debate about economic principles. Let's hope.
